Article
Marketability Discounts Prove Critical Factors in Appraisal
When equity interests are transferred, appraisal reports are often required for tax purposes.
When the subject interest represents a minority interest in the underlying business or asset, the interest is typically valued at a discount from net asset value to reflect, among other factors, the lack of marketability. When such discounts are incorporated, it is critical that the appraisal report be prepared by a qualified appraiser and be prepared in such a way to withstand the scrutiny of Internal Revenue Service (IRS).